Dividend stocks are excellent to hold in an investment portfolio because of the passive income you could generate. Fortunately, the Canadian stock market offers investors a plethora of outstanding dividend stocks. However, even with that many excellent options, it’s important that investors be prudent and choose the best stocks to hold in their portfolio.
In this article, I’ll discuss three characteristics that investors should keep in mind when choosing dividend stocks.
Look for stocks with a long history of paying dividends
When looking for dividend stocks to add to your portfolio, it’s important to know how long a company’s been paying its investors a dividend. Companies with longer histories of dividend distributions should be preferred over other companies. The reason for that being that those companies have proven that they prioritize maintaining a stable dividend.
In the Canadian banking industry, investors can find many companies that have been paying shareholders a portion of their earnings for more than a century. Bank of Nova Scotia (TSX:BNS) in particular has been paying its shareholders a dividend since July 1, 1833. Since then, it has never missed a dividend payment. That represents nearly 190 years of continued dividend distributions.
Some companies are great at increasing their distributions over time
In addition to a long history of distributing dividends, some companies are known for increasing their dividend rate over time. This is important because a stagnant dividend could cause investors to lose buying power over time due to inflation. In my opinion, investors should look for stocks that raise dividends by 5% on an annual basis.
Canadian National Railway (TSX:CNR) is an example of a company that has done an excellent job of raising its dividend over time. This stock first started distributing a dividend to shareholders in 1996. At that time, investors were paid a dividend of $0.016667 per share. Canadian National’s most recent dividend was $0.79 per share. That represents a compound annual growth rate of nearly 16% over the past 26 years, helping investors stay much ahead of inflation.
Keep in mind a company’s payout ratio
Finally, investors should take note of a company’s payout ratio. Simply put, this is the ratio between a company’s dividend and its earnings. A lower payout ratio should be preferred, as it suggests that a company’s dividend is more secure should it experience a slowdown in earnings or revenue. Generally, I look for stocks that maintain a payout ratio of 30% or lower.
Alimentation Couche-Tard (TSX:ATD) is an example of a company that maintains an exceptional payout ratio. This stock has raised its dividend in each of the past 11 years. However, despite those raises, Alimentation Couche-Tard’s payout ratio is still only 12.7%. That makes me very confident that Alimentation Couche-Tard could continue to offer investors a reliable dividend for many years to come. This stock deserves consideration for your dividend portfolio today.
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TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
